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August 2017

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To add value and transparency to monetary policy decision, the Government of India has initiated process to constitute Monetary Policy Committee (MPC) under the Reserve Bank of India Act, 1934 (RBI Act).

The RBI Act has been amended by the Finance Act, 2016 to provide for a statutory and institutionalised framework for a MPC with a view to maintain price stability, while keeping in mind the objective of growth.

The MPC will have six members, of which three members will be from the RBI, including the governor, who will be the ex-officio chairperson, and the RBI deputy governor.

The other three members of MPC will be appointed by the Central government, on the recommendations of a Search-cum-Selection Committee, which will be headed by the Cabinet Secretary. These three members will be experts in the field of economics or banking or finance or monetary policy and will be appointed for a period of 4 years and shall not be eligible for re-appointment.

The meetings of the MPC shall be held at least 4 times a year and it shall publicise its decisions after each such meeting. (RKS)